the world economy.
NORHT FIELD AND SOUTH PARS: QATARAND IRAN’S OFFSHORE GAS FIELD
The world’s biggest gas field, shared with Iran, has enabled Qatar to become the largest LNG exporter.
Source: IHS CERA
Qatar is also a key element in the larger mosaic of the world natural gas market. Not so many years ago, there were three distinct gas markets. One was Asia, mainly fed by LNG. The second was Europe, with a mix of domestic gas, long-distance pipeline gas, notably from Russia, plus some LNG. And North America, with virtually all gas delivered by pipeline. Each had its own distinctive pricing system. But then the development of LNG, represented most notably by Qatar, appeared to be tearing down the walls. The markets looked like they were coming together and would eventually be integrated into a single global natural gas market in which prices were converging. That seemed irreversible—until a major innovation in the United States made it reversible.
After the inaugural ceremonies, the emir boarded a minibus to tour the new facility. The bus crossed the sand and then turned into the site. It was like driving into a dense forest, but one that was not damp and whose colors were not varieties of green but rather silver and steel glinting under the dry desert sun. For this forest had none of the vagaries of nature but rather was an intricately planned maze of interconnected pipes and towers and turbines and, occasionally, what looked like huge white Thermos bottles. That image was appropriate enough since the liquefaction train was in effect a giant-sized refrigerator, into which was pumped the natural gas from the North Field, after it had been scrubbed and cleaned of impurities. There, through a facility that stretched more than a half mile, the gas would step by step be compressed and refrigerated. It would come out the other end as a liquid that could be pumped into ships and transported around the world. And it was a very expensive forest. Adding up all the trains together, some $60 billion of engineering and hardware has been compressed into this small area in a remarkably short number of years.
This train—70,000 tons of concrete, 440 kilometers of electric cable, 13,000 metric tons of piping—was one stage in the great complex at Ras Lafan, which in its entirety is the single largest node in the expanding global LNG business that involves more and more countries. The growing list of LNG suppliers ranges from Malaysia, Indonesia, and Brunei in Asia; to Australia; to Russia (from the island of Sakhalin); to Qatar, Oman, Abu Dhabi, and Yemen in the Middle East; to Algeria, Libya, and Egypt in North Africa, and Nigeria and Equatorial Guinea in West Africa; to Alaska; to Trinidad and Peru in the Western Hemisphere. Other countries may join in the queue, including Israel, after a major new gas discovery offshore that could turn the Eastern Mediterranean into a new frontier for gas development.
This global expansion of LNG is a very big business. Projects today can easily run $5 billion or $10 billion—or even more—and take five to ten years to complete. The Gorgon prospect in Australia is budgeted at $45 billion. Altogether, the price tag for LNG development worldwide could add up to as much as half a trillion dollars over the next fifteen years.
Yet the very possibility of this huge global LNG business derives from a single physical phenomenon—that when natural gas is compressed and brought down to that temperature of −260°F, it turns into a liquid, and, as such, takes up only 1/600th of the space it occupies in its gaseous state. That means it can be pumped into a specifically designed tanker, shipped long distances over water, and then stored or re-gasified and fed into pipelines and sent to consumers.
But very few of the participants in this business today would know that the industry owes its existence to someone whose fascination with LNG long predated theirs.
CABOT’s CRYOGENICS
Just after World War I, Thomas Cabot, a graduate of both Harvard and the Massachusetts Institute of Technology, had headed down to West Virginia to sort out a natural gas pipeline business owned by his father, Godfrey, who, to Thomas’s distress, had lost all interest in it. Returning to Boston, Thomas found that he had other pressing family business to attend to—keeping his father from going to jail. It turned out that Godfrey had had no use for the federal income tax, which Woodrow Wilson had signed into law in 1913, and for the next